Innovations LIVE Effective Solutions to the Climate Challenge in Latin America and the Caribbean

8/18/2019 Innovations LIVE Effective Solutions to the Climate Challenge in Latin America and the Caribbean

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INNOVATIONS

Innovations LIVEEffective solutions to climate change

in Latin America and the Caribbean.


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INNOVATIONSEffective solutions to climate change in Latin America and the Caribbean.


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5/52i Innovations LIVE | IDB

INNOVATION& CLIMATEAs we continue working on

climate change, one concept keepsresurfacing: the need to innovate

Climate change is changing the business as

usual, which means changing policy priori-

ties or allocating resources to actions previ-

ously underfunded. But also, changing busi-

ness as usual is an opportunity to do things

differently, and opportunity to innovate.

Innovation can come in different forms,from processes to using different materials,

to taping into new sources of financing, all

of these choices made hoping to achieve a

different outcome. Whether the outcome

is to encourage more people to take action

through community engagement or to in-

crease a country’s energy security by diver-

sifying the energy matrix, innovation serves

as a positive force for change. Innovation

creates ideas, exciting exchange of lessons

among teams, enabling a virtuous cycle

of creation and learning that takes us to abetter tomorrow. That is the underlying phi-

losophy the IDB has adopted, and the work

on climate is no exception.

We recognize that for climate action, three

main building blocks have change the way

we do things. New technology, changing

financing schemes and generating policy

frameworks that allows all these options to

take root.

Innovative Technologies, Financing Schemes

and Policies, can help respond to the rising

challenge of climate change in the Latin

American region. This region is particularly

vulnerable, with an estimated annual cost

of around 2 to 4 % of the region’s GDP by

2050. In fact, these costs are even higher

when taking into account income levels,where the most vulnerable populations in

the region are the ones bearing higher costs.

The challenge of climate is an opportunity to

change development patterns towards low

carbon and resilient development, opening

up new opportunities for every inhabitant

of Latin-America. This publication is just a

sample of 27 innovative experiences ranging

from Mexico to Haiti. They showcase inno-

vative business practices in remote commu-

nities, fostering green bonds in large capitalmarkets, as well as advance policy initia-

tives that combine fiscal instruments with

big data. These are examples of projects the

IDB has designed together with the region to

improve lives. Every day. Live.

Alexandre Meira da RosaVice President for Countries Inter-American Development Bank


6/52iiInnovations LIVE | IDB

Cataloging-in-Publication data provided by theInter-American Development BankFelipe Herrera Library

Inter-American Development Bank

Innovations LIVE: effective solutions to climate change in Latin

America and the Caribbean / Inter-American Development Bank

p. cm. — (IDB Monograph ; 273)

1. Climatic changes—Environmental aspects—Latin America. 2.

Climatic changes—Environmental aspects—Caribbean Area. 3. Climate

change mitigation—Latin America. 4. Climate change mitigation—

Caribbean Area. I. Inter-American Development Bank. Climate Change

and Sustainability Division. II. Title. II I. Series.

IDB-MG-273

Keywords:Climate Change, Adaptation, Mitigation, Latin America,

Caribbean, Financing, Technology, Big data, Policy

JEL Codes: Q2 , Q54, O13

www.iadb.org

The opinions expressed in this publication are those of the authors and

do not necessarily reflect the views of the Inter-American Development

Bank, its Board of Directors, or the countries they represent.

The unauthorized commercial use of Bank documents is prohibited and

may be punishable under the Bank’s policies and/or applicable laws.

Copyright © 2014 Inter-American Development Bank. All rights

reserved; may be freely reproduced for any non-commercial purpose.

Publication team: Climate Change and Sustainability Division

Coordination: David Wilk | [email protected] and Hilen Meirovich | [email protected]

Design and editing: Cecilia Reifschneider | Chapter introductions: Agustín Cáceres


7/52iii Innovations LIVE | IDB

Stories of effective solutionsto the climate challengein Latin America and the Caribbean

Housing developers innovate to avoid CO2 emissions 02

What can our ancestors teach us about climate change adaptation? 03

Women take matters into their own hands and become plumbers 04

Hybrid buses tackle air quality and fossil fuel dependency 05

Creating new methodologies to effectively ride the data wave 06

Betting on the public domain to strengthen the coffee sector 07

Hydro-BID data management and simulation system 08

Agrimonitor 09

$

TECHNOLOGY

FINANCING

POLICY

Pachamama insures farmers against extreme weather events 12

Commercial buildings turn the switch to energy efficiency on 13

Natural capital— financing the sustainability of this development asset 14

Green Bonds: the rise of a new asset class in Latin America 16

How can financing provide a solution to natural disasters? 17

Making green finance available to those most vulnerable 18

Five steps to turn on the heat and avoid CO2 emissions 20

Shedding renewable light on the mining sector 21

Tailor-made financing helps the private sector to go green 22

Guatemala improves policy to help communities and forests 26

A little steam goes a long way in energy policy 27

Mayors work on concrete plans to ensure a sustainable future 28

A new institutional structure helps climate resilience take root 30

Ten years to an integrated water resource management 31

A multi-state approach to addressing climate risks 32

What happens when ministers of finances think about the climate? 33

Building resilience into fiscal and physical infrastructures 34

In Uruguay the winds of change point to an energy revolution 35

Creating knowledge for sustainable urban mobility 36

Publications 40

Databases 42


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TECHNOLOGY

If anything will characterize the twenty-first century it is the

birth and spread of technologies with enormous disruptive

effect. The advances of the digital world have transformed

the way we consume, learn and relate. It has also created new

business opportunities.

Technology in the field of climate change is no exception: new

technologies are changing the way we share information and

transforming climate sectors such as agriculture, transport,water resource management and energy generation.

The following pages contain some examples of technology

and knowledge transfer in new markets, as well as the use of

big data to improve climate adaptability in agriculture, and

water management.

“There’s a wayto do it better...

find it.”Thomas A. Edison

Innovations LIVE | IDB01


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The ECOCASA program requires that housing projects have a minimum of20 percent reduction of CO2 emissions compared to a baseline, howeverit does not prescribe particular technologies.

This spurs innovation among different de-

velopers, which can experiment with biocli-

matic design, architecture that is connected

to nature, different technologies and build-ing materials. It also keeps costs low as de-

velopers can adapt their housing designs to

the wide variety of climate zones in Mexico.

The program intends to contribute directly

to the reduction of over a mil-

lion tons of greenhouse gas

emissions over 40 years, the

estimated life-cycle of these

houses.

The program’s concession-

al resources are being usedto provide bridge loans to developers for

construction of low-income houses with

low-carbon standards in Mexico.

ECOCASA is expected to build 27,600

houses and finance some 1,700 “green”

mortgages. By increasing the production of

low-carbon housing via adequate financing

and the supply of mortgages for low-carbon

housing, ECOCASA helps reduce energy con-

sumption and spending, cut greenhouse gas

emissions and strengthen government poli-cies and initiatives.

The program mainstreams sustainability cri-

teria in the housing industry by the deploy-

ment of low-carbon housing with financing

and incentives that lowers the costs for de-velopers and home owners.

The program is also expected to provide ad-

ditional, long-lasting benefits to the housing

sector in Mexico, as it will be

part of Mexico’s NAMA plan.

As of early 2014, more than

700 housing units were

completed, over 5.000 addi-

tional units were approved

for financing and are cur-rently under construction, and more than

9.000 additional units had submitted for

evaluation.

ECOCASA has led to the creation of a strong

structure of institutional coordination with

the relevant agents in the housing sector.

Every month, the program financiers who

participate in the Sustainable Housing

Committee, organized by the Comisión

Nacional de Vivienda CONAVI, make joint

decisions on technical and policy aspects.

Winner

UNFCCC Lighthouse

Activity Award Momentum for Change

Housing developers innovate to avoid CO2 emissions

Housing developers innovate to

avoid CO2 emissionsThe first-ever Nationally Appropriate Mitigation Action specific to housing poolsresources to scale up the deployment of low-carbon homes.

IDB Project #

ME-L1121ME-T1201ME-T1202

Country of implementation:

MexicoDates of implementation:

2012-presentInstitutional counterpart:Sociedad Hipotecaria Federal (SHF)

Amount disbursed/leveraged:

US$99.5 million50 million IDB and 49.5 million CTF;co-financing from KfW US$ 105.5 millionand the LAIF US$ 9 million

IDB Divisions:Capital Markets and Financial Institutions (CMF)Climate Change and Sustainability (CCS)

More info?

read the blog postall about ECOCASAwatch the video

Contact information:Ramon Guzmán | [email protected] Alatorre | [email protected]

http://blogs.iadb.org/cambioclimatico/2014/10/03/5-ecotecnologias-de-bajo-costo-para-que-tu-casa-sea-mas-eficiente/http://www.iadb.org/en/topics/climate-change/unfccc-recognizes-ecocasa-program-in-mexico-as-a-global-example-in-the-fight-against-climate-change,8016.htmlhttp://vimeo.com/96721700http://vimeo.com/96721700http://www.iadb.org/en/topics/climate-change/unfccc-recognizes-ecocasa-program-in-mexico-as-a-global-example-in-the-fight-against-climate-change,8016.htmlhttp://blogs.iadb.org/cambioclimatico/2014/10/03/5-ecotecnologias-de-bajo-costo-para-que-tu-casa-sea-mas-eficiente/http://unfccc.int/secretariat/momentum_for_change/items/7848.php


11/5203 Innovations LIVE | IDB What can our ancestors teach us about climate change adaptation?

What can our ancestors teach us

about climate change adaptation?Taking advantage of their rich cultural heritage, Guyana and Peru apply theirancestral knowledge towards a sustainable lifestyle for those with little means.

IDB Project #

GY-L1019


Guyana Dates of implementation:

2014

IDB Divisions:Fiscal Municipal Management (FMM)

Guyana is implementing a groundbreaking housing scheme in thecountryside to improve lives of Amerindians, a group afflicted by highrates of unemployment and poverty.

According to a 2009 IDB study, 74 percent

of Amerindians live in inadequate and over-

crowded housing, and affordable housing

can be an issue even where subsidies exist.

The solution, being tested in two regions

in Guyana, is a system where the commu-

nity pays for new homes or improvements

through their own time and labor. So far, 208

families have already shared and preserved

traditional knowledge in construction while

building houses out of affordable, local ma-

terials. They are the happy owners of homes

with sanitary systems and potable water,

due to rainwater harvesting.

IDB Project #

PE-L1149


Peru Dates of implementation:

2014

IDB Divisions:Climate Change and Sustainability (CCS)Gender and Diversity (GDI)

Meanwhile, Peru is tapping into their patrimony to recover the productivityof pre-Columbian agricultural terraces, or pata-pata in Quechua.

Then and now, these terraces are a means

of expanding the agricultural frontier, adapt

to climate change, control erosion and pre-

vent natural disasters, while promoting food

security.

The project is an ambitious undertak-

ing, kicked-off by the cataloging and geo-

referencing of 340.719 hectares of terracesthroughout 11 regions in the country. We’ve

found that 75 percent of the pata-pata is cur-

rently in use, but in some areas productivity

is especially low due to disrepair.

Of farmers who participated in the pilot,

84% have seen increases in income linked to

productivity (Quinoa, for example produced

almost twice as much).

For now, the IDB will focus on 16000 fam-

ilies living in a key six percent of these ter-

races. We will manage natural resources to

balance water cultivation and small waterinfrastructure elements, while strengthen-

ing technical capacities, promoting cultural

knowledge, and creating a “traditional crop”

seal to boost income.

It’s just a start, but such programs can

bring hope for a better life.

Contact information:Ophelie Chevalier | [email protected]

Contact information:Carlos Perafán | [email protected] Ardila | [email protected] Grunwadlt | [email protected]



Women take matters into their

own hands and become plumbersLow-income women in Mexico learn the water sanitation trade and install speciallydesigned water fixtures, taking control of home finances and climate change.

IDB Project #

ME-M1080


MexicoDates of implementation:

2014-2015


US$785,000MIF contribution: USD300,000

IDB Group:Multilateral Investment Fund (MIF)

This 100% self-sustainable pilot project addressed severe water shortagearound Mexico City and included citizen activism in the governance oftheir city’s water supply.

About 70 percent of Mexico City’s water

comes from an aquifer, leaving the water

table incredibly stressed. About 30 percent

of the water is pumped uphill from kilome-ters away. Currently there are ten million

people in Mexico who lack access to clean

water.

Thanks to the Lady Plumbers training pro-

gram, developed by Cambio Azul S.A with

financial support from the MIF, the new

formal labor force changed the water fix-

tures of 15,000 low-income households in

water-stressed regions. Specially designed,

innovative, high-efficiency water fixtures

were installed by teams of 50 local women,trained as plumbers through the project

duration. Once the water fixtures were de-

signed and the relative custom molds pro-

duced, production of additional units were

quite inexpensive.

Each family that participated in the project

is expected to save 40+ days of income per

year (approximately US$300) by lowering

their use of hot water. That is equivalent to

up to 40% water and 25% energy savings

per household, and approximately 15,000CO2 tons/year worth of carbon credits.

The projects’ sustainability is achieved

through the sale of carbon and water cred-

its, certified under the UN CDM scheme

(registered as Gold Standard and CDM in

2012).

The set-up costs were financed through ablend of reimbursable and non-reimburs-

able resources provided by the MIF, the proj-

ect developer, and the prospective buyer of

the carbon credits.

We hope that other cities in Central and

South America adapt the training, distribu-

tion and logistics arrangements, and data

collection and analysis of the project to

reach groups for which formal labor oppor-

tunities are in scarce supply, while relieving

water stressed regions.

Women take matters into their own hands and become plumbers

Contact information:Filippo Berardi | [email protected]

the instalation of high-efficiency water fixtures

the instalation of high-efficiency water fixtures

of running water

of running water

almost

almost

4 gallons per minute

1 gallon per minute

Before

After


13/52Innovations LIVE | IDB05

Hybrid buses tackle air qualityand fossil fuel dependencyBogotá’s integrated public transport system to finance hybrid and electric buses.

IDB Project #

CO-L1096


ColombiaDates of implementation:

2010-2013


US$40 million

IDB Divisions:Transport (TSP)

The Hybrid and Electric Bus Test Program,an initiative designed and implemented bythe C40 Cities Climate Leadership Groupin partnership with the Clinton ClimateInitiative, and with financial support fromthe Inter-American Development Bank (IDB),makes the case that hybrid and electrictechnologies can perform as well or betterthan comparable diesel-powered buses andwithin a reasonable payback period. In LatinAmerica, where the transport sector is alreadythe largest contributor of GHG emissions,several cities have been working to improvetheir transport systems to achieve improvedair quality, better road safety, and greatersocial inclusion.

Bogotá is a leader in innovative urban mass transport solutions. It isexpected that the present program will serve as a model for other citiesin the region.

Some 282 clean technology buses have

replaced aging and polluting public trans-

port vehicles serving residents of Bogotá,

Colombia. The new buses reduce operat-ing costs, improve air quality, and cut GHG

emissions.

The Technological Transformation Program

for Bogotá’s Integrated Public Transport

System has been financed by a CTF loan for

US$40 million.

Investment in new vehicles for the SITP will

amount to approximately US$840 million

over the concession period of 24 years. In

order to meet these investment require-ments, SITP concessionaires firms can

either use their own capital or obtain financ-

ing through local financial institutions.

Designed in 2009, the SITP is being imple-

mented gradually to ensure a smooth transi-

tion to the new operating system.

The SITP complements Bogotá’s Bus Rapid

Transit system known as Transmilenio,

which presently consists of 116 kilometers

of exclusive lanes for high-capacity buses.

These corridors currently handle 31 percent

of public transport trips. The remaining 69

percent are served by the traditional public

transport fleet, which the SITP will gradual-ly replace. It is expected that the number of

buses will be reduced from 16,000 to 9,900

while replacing diesel buses more than

12-years-old.

The total implementation of the SITP in

Bogotá over a 24 year period, will lead to

a GHG emissions reduction of 2.2 million

metric tons.

The emission reductions will result from re-

ductions in the size of the city’s bus fleet,optimization of the transit routes, reduc-

tions in the average age of the fleet, and

technological improvements in diesel en-

gines and hybrid and electric buses.

In the same way that the Transmilenio

system has been replicated in over 30 cities

around the world, the SITP model has a high

potential for being adopted by other cities

seeking an integrated multi modal transport

system that is both well organized and envi-

ronmentally sustainable.

Hybrid buses tackle air quality and fossil fuel dependency

Contact information:Carlos Mojica | [email protected] Concha | [email protected]


14/5206Innovations LIVE | IDBCreating new methodologies to effectively ride the data wave

Creating new methodologies to

effectively ride the data waveNew realities make new methodologies crucial to handling our environment andmaking informed socio-economic plans and decisions.

IDB Project #

BA-T1025


BarbadosApproval date:

2013Institutional counterpart:Government of Barbados (GOB)Coastal Zone Management Unit (CZMU)

IDB Divisions:Rural Development and Disaster RiskManagement (RND)

Latin America and the Caribbean’s economy is inextricably linked to water— be it in the form of marine and coastal environments or freshwatersystems such as rivers and lakes.

In Barbados, the tourism industry, which is

heavily dependent on the marine and coast-

al environment, accounts for over 40% of

employment and GDP.

Yet the country faces a number of challeng-

es in systematically managing coastal re-

sources and risks in the face of a changing

climate.

Together with the IDB, the government of

Barbados has partnered the Natural Capital

Project, the World Wildlife Fund, and The

Nature Conservancy, as well as contracted

the consortium Downstream Strategies

to develop this new stakeholder-driven

methodology.

This science-policy methodology is now

used to identify, prioritize, map and esti-

mate the economic value of ecosystem ser-

vices in Barbados, while building analytical

capacity with custom spatial tools such as

InVEST (Integrated Valuation of Ecosystem

Services and Tradeoffs). With it, Barbadians

can improve the management of a source of

sustenance, inspiration, recreation, and cul-

tural heritage — the coast.

IDB Project #

RG-T1797

Dates of implementation:

2014Institutional counterpart:Environmental & Energy Alliance for CentralAmerica (AEA), under the coordination of theLatin American Energy Organization (OLADE)

IDB Divisions:Climate Change and Sustainability (CCS)Energy (ENE)

How vulnerable can a specific hydroelectric system be to climate changeand what can be done to adapt these systems to anticipated impacts?

Throughout Latin America and the Caribbean

hydroelectric plants contribute significantly

to the reduction of CO2 emissions from the

energy generation sector. However, coun-

tries need to know how to tackle impending

impacts of climate change on hydroelectrici-

ty at the plant level.

That is why, over the last two years, the IDBand partners analyzed terabytes-worth of in-

formation to develop a step-wise methodol-

ogy for hydroelectric plants.

The effort involved combining a group of

state of the art software, analyzing over

500 watersheds in seven countries, and the

work of over 40 professionals from Central

America.

This new methodology allows hydroelec-

tric plants across Latin America and the

Caribbean to define adaptation alternativesto minimize impacts on their productivity

margins and assess costs and benefits of

these alternatives.

Contact information:Cassandra Rogers | [email protected]

Contact information:Maricarmen Esquivel | [email protected] Roberto Paredes | [email protected]



Betting on the public domain to

strengthen the coffee sectorUsing the latest sequencing technology, researches decode the arabica andeugenioides coffee genomes, furthering the climate smart agriculture agenda.

IDB Project #

RG-T1655


ColombiaDates of implementation:

2010-2014Institutional counterpart:National Coffee Research Center (CENICAFE) —the R&D arm of the Colombian Coffee GrowersFederation (FNC), andRegional Fund for Agricultural Technology(FONTAGRO).


US$770,000

IDB Divisions:Climate Change and Sustainability (CCS)

Recent weather patterns are responsible for changes in coffee production,with significant impacts on production, incidence of pests and diseases,and risks to the sustainability of coffee ecosystems.

For example, the coffee leaf rust fungus has

had devastating effects in Latin America.

During the 2012-13 harvest, over 50 percent

of the Central American coffee farm areawas affected by the fungus and more than

350,000 people lost their jobs.

Quality coffee farming requires long-term

solutions that enable producers to adapt

to new conditions and reduce the uncer-

tainty that climate can have on production.

Among the options for adaptation is the

adoption of new varieties. Currently, the

complete breeding cycle to develop new va-

rieties can take over twelve years. However,

both the time and costs of the breedingprocess could be reduced given this new

genomic information.

The complete sequence of the 22 coffee

chromosomes was decoded in an effort to

accelerate the process of selecting plant va-

rieties that tackle both local climatic chang-

es and the specific needs of coffee growers.

This advanced and highly detailed data

was generated using the latest sequenc-

ing technology in an effort to strengthenthe competitiveness and sustainability of

the production of high quality coffee in the

global market. The genetic information of

the Coffea arabica and Coffea eugenioides

species contains the location and character-

ization of more than 30,000 genes respon-

sible for all aspects of the plant, and is valu-

able information for coffee breeders. Theseresults add to the recent announcement

of the genome sequencing of the robusta

coffee species Coffea canephora, conducted

by a consortium led by French researchers.

The future of the coffee industry, which is

responsible for over 14 million jobs in Latin

America and the Caribbean, depends on the

ability of farmers to cope with the contin-

uous climatic, technological and econom-

ic changes that are currently taking place.

Proper use of advanced technologies inconjunction with other adaptation measures

will allow farmers to continue in the coffee

business, thus encouraging the communi-

ties’ economic and social development.

Betting on the public domain to strengthen the coffee sector

Contact information:Ana R. Rios | [email protected]

More info?

share the blog post:Can Colombia lead theway to the agricultureof the future?

http://blogs.iadb.org/cambioclimatico/2014/02/27/can-colombia-lead-way-agriculture-future/http://blogs.iadb.org/cambioclimatico/2014/02/27/can-colombia-lead-way-agriculture-future/http://blogs.iadb.org/cambioclimatico/2014/02/27/can-colombia-lead-way-agriculture-future/http://blogs.iadb.org/cambioclimatico/2014/02/27/can-colombia-lead-way-agriculture-future/http://blogs.iadb.org/cambioclimatico/2014/02/27/can-colombia-lead-way-agriculture-future/http://blogs.iadb.org/cambioclimatico/2014/02/27/can-colombia-lead-way-agriculture-future/


16/52Innovations LIVE | IDB 08Hydro-BID data management and simulation system

As part of its commitment to help member countries adapt to climatechange, the IDB has sponsored work to develop and apply an integratedsuite of cutting edge watershed modeling tools.

The Hydro-BID modeling system includes

hydrology and climate analysis modules

to estimate the availability (volumes and

fluxes) of freshwater at the regional, basin,and sub-basin scales. It also includes eco-

nomic analysis and decision support tools

that estimate the costs and benefits of adap-

tive measures, which helps make informed

choices among alternative designs for infra-

structure projects and water resources man-

agement policies.

The outcome of this effort produced a first

version of Hydro-BID, an integrated hydrol-

ogy and water resources simulation model

for Latin America and the Caribbean. TheHydro-BID system includes the following:

• Analytical Hydrography Dataset (AHD)

representing more than 230,000

catchments in the LAC region and

their corresponding river and stream

segments;

• Geographic information system-

based navigation tool to browse AHD

catchments and streams with the

capability of navigating upstream and

downstream;

• User interface for specifying the areaand time period to be modeled and the

location at which water availability will

be modeled;

• Climate data interface to obtain rainfall

and temperature inputs for the area and

period of interest;

• Rainfall-runoff model based on the

Generalized Watershed Loading Factor

(GWLF) model; and• Routing scheme for quantifying time of

travel and accumulating flow estimates

across downstream catchments.

Hydro-BID generates output in the form of

a daily time series of flow estimates for the

selected location and period.

This data management tool has been devel-

oped to serve as a key planning tool for:

• Water resources planning and

management agencies;• Drainage/flood control authorities;

• Irrigation authorities;

• Hydroelectric power generators;

• Water supply and sanitation utilities;

and

• Industrial water users.

Hydro-BID was designed from the ground-

up to be a scalable data management and

simulation system, capable of simulating

single watersheds (as small as 50-60 km2)

to larger watersheds (typically on the orderof thousands of km2).

The IDB is currently scaling up pilot applica-

tions to the national level.

Hydro-BID data management and

simulation systemForecasting water balances at the basin-level under scenarios of climate change inLatin America and the Caribbean.

IDB Project #

RG-T1862

Institutional counterpart:Comisión Regional del Río Bermejo(COREBE, Argentina)


US$ 495,000Multi-donor Aquafund

IDB Divisions:Water and Sanitation (WSA)

Contact information:Fernando Miralles-Wilhelm | [email protected]

More info?

read the blog postwatch the video

http://blogs.iadb.org/cambioclimatico/2014/03/09/easier-said-done-untangling-water-energy-food-nexus/https://www.youtube.com/watch?v=qlsqzWpJWwchttps://www.youtube.com/watch?v=qlsqzWpJWwchttp://blogs.iadb.org/cambioclimatico/2014/03/09/easier-said-done-untangling-water-energy-food-nexus/


17/52Innovations LIVE | IDB09 Agrimonitor PSE Database

Did you know Jamaicans pay higher prices

for farm produce than any other Caribbean

countries? Or what percentage of its nation-

al budget Colombia spends on agricultural

research?

Researchers and policymakers now have

these facts at their fingertips through the

first agricultural policy-oriented tool forthe Latin American and Caribbean region

— Agrimonitor.

This offers an invaluable opportunity for a

detailed quantitative evaluation of the agri-

cultural policies of the region. The database

collates information on the transfers to pro-

ducers of farm products arising from the mix

of policies in use in each country. Calculations

are performed for a basket of products rep-

resenting at least 70% of the gross value of

agricultural production on average during thethree years prior to the study.

Most taxpayers want to know how their hard-

earned money is being spent, and consumers

want to know why food prices are so high

- now it’s that much easier to get answers

about topics such as payments of subsidies

and commodity transfers to support prices.

Today, with issues such as climate change,

food security, competitiveness and regional

integration on the public policy agenda, theProducer Support Estimate (PSE) concept has

never been so important.

Agrimonitor A new knowledge platform for agricultural policy monitoring and analysis

IDB Project #

RG-T1872

Dates of implementation:

2013 - 2014Institutional counterpart:National Coffee Research Center (CENICAFE) —the R&D arm of the Colombian Coffee GrowersFederation (FNC), andRegional Fund for Agricultural Technology(FONTAGRO).


US$ 1.17 million

IDB Divisions:Rural Development and Disaster RiskManagement (RND)Climate Change and Sustainability (CCS)

> Hydro-BIDin HaitiThis big data tool’s high resolution

digital elevation model, and rainfall

data were some of the hydrologicalparameters developed and applied to

the Caracol Industrial Park.

The 2D flood simulation model allowed

for the calculation of areal flooding,

with flooding depths, and flow rates

throughout the industrial park.

Different intervals of simulations were

carried out for storms from 1—200 year

return periods, and results included

flood depths and times of inundation.

In addition, water quality simulations

were carried out to determine impacts

of proposed wastewater discharge

rates on the water quality of the river

and along its discharge path to the bay

of Caracol, for the various river flow

conditions.

HA-L1055, HA-L1076, HA-L1081; HA-T1179

IDB Divisions:Fiscal and Municipal Management (FMM)Water and Sanitation (WSA)

Contact information:Paul Trapido | [email protected] Ludeña | [email protected]

Contact information:Ana Maria Saiz | [email protected] Miralles-Wilhelm | [email protected]


19/52

FINANCING

$

You don’t just need ideas to innovate, you also need access to

resources. The IDB mobilizes public, private, and internation-

al climate finance to bring Latin America and the Caribbean

new solutions and innovative models for tackling climate

change with proven effectiveness.

In 2013 alone, the region received a total of 2.806 million

dollars in international climate finance. Forty-three percent

of this total was channeled through the IDB — 1.220 million.

In addition to mobilizing international financing, we also sup-

port new forms of private funding to leverage additional re-

sources and promote new business opportunities that strive

for a sustainable development model, low in carbon and

resilient to climate change. An example is the green bonds,

which brings together funds and institutional investors. The

IDB plays an important role in facilitating these transactions,

by aligning the interests of depositors and investors and re-

ducing the initial risk associated with the financing of such

innovative projects.

“Everything that canbe counted does notnecessarily count;everything that countscannot necessarily be

counted.”Albert Einstein



20/52Innovations LIVE | IDB 12Pachamama insures farmers against extreme weather events

P h o t o : V i c e p r e s i d e n t e Á l v a r o G a r c í a L i n e r a

i n d e m n i z a e l S e g u r o A g r a r i o e n e l m u n i c i p i o d e G u t i é r r e z

© h t t p : /

/ w w w . i

n s a . g

o b . b

o

Pachamama insures farmers

against extreme weather eventsHighly vulnerable rural population gets groundbreaking access to risk managementinstruments in an effort to adapt.

IDB Project #

BO-T1221BO-T1224


BoliviaApproval date:

2014Institutional counterpart:Instituto Nacional del Seguro Agrario(National Institute of Agriculture Insurance)


US$670,000Non-reimbursable resources provided by theIDB (approved)US$10 millionConcessional financing by the CIF-PPCR PrivateSector Set-aside was identified (endorsed).

IDB Divisions:Capital Markets and Financial Institutions (CMF)Rural Development and Disaster RiskManagement (RND)Climate Change and Sustainability (CCS)

The “Pachamama” Agricultural Insurance Program was developed bythe Government of Bolivia to help farmers to cope with losses caused byextreme weather events.

Thanks to the involvement of municipal and

community authorities, the project intro-

duces a financial instrument to those living

in remote areas, a previously untapped localinsurance market.

The first phase of the program, which is

currently in pilot stage, involves the imple-

mentation of multi-peril protection insur-

ance for small farmers in only the poorest of

municipalities.

The project protects food security by provid-

ing insurance coverage to strategic crops in

the country, and contributes to poverty re-

duction by alleviating the economic impactsof extreme weather events to the more vul-

nerable population.

Although “Pachamama” was conceived as a

public-private scheme in which the govern-

ment is responsible for risk-sharing, financ-

ing and distribution and administration ac-

tivities, while the local insurers provide the

underwriting of the risks; the government is

currently absorbing all the risks of the insur-

ance policies issued by the project.

Continuing with the current level of risk

retention by the public sector could com-

promise the expansion and sustainability

of the insurance program in the long term,

as the potential financial impact of agricul-

tural risks could substantially increase and

Bolivia’s fiscal position could vary adversely

in the future.

Crowding in private insurance companies

into this new segment requires:

• technical capabilities and information to

properly analyze risks, and

• risk sharing mechanisms.

Therefore, new financial instruments are

being developed in order to expand the

scope of the agricultural insurance (both

geographic expansion and crops coverage)

in an efficient way, for instance, through thedesign of parametric insurance policies.

Furthermore, in order to strengthen the long

term sustainability of the insurance pro-

gram, improve its financial efficiency and

facilitate the participation of the local insur-

ance market and international re-insurers,

the project will support the establishment

of a stop loss fund that will cover a portion

of the eventual losses (second loss) of the

insurance program, leaving the first loss to

participating local insurers who will transferthe tail risk and losses to the international

reinsurance market.

www.insa.gob.bo

$

P h o t o : E r i k M u r i l l o F e r n á n

d e z

More info?

photos,interviews& publications:

Contact information:Juan J. Durante | [email protected] Balcazar | [email protected] Grundwaldt | [email protected]

http://www.insa.gob.bo/http://www.insa.gob.bo/http://www.insa.gob.bo/http://www.insa.gob.bo/http://www.insa.gob.bo/http://www.insa.gob.bo/http://www.insa.gob.bo/http://www.insa.gob.bo/



Commercial buildings turn the

switch on energy efficiencyThe first guarantee fund that covers both project performance and borrower creditrisk is transforming Brazil’s energy market.

IDB Project #

BR-X1018


BrazilDates of implementation:

2012-2023Institutional counterpart:Global Environment Facility (GEF) andUnited Nations Development Program (UNDP)


$25million10m from GEF support for risk and$15m IDB exposure

IDB Divisions:Structured and Corporate Finance (SCF)

In terms of energy, efficiency might be the best means to meet LatinAmerica and the Caribbean’s needs, and jump starting this market couldstart a revolution throughout our region.

However, even in a giant such as Brazil, in-

vestments are typically too small and costly

for commercial banks, and the technology

risks are not well understood by the market.

As the first guarantee fund that covers

both project performance and borrower

credit risk, the Energy Efficiency Guarantee

Mechanism (EEGM) is transforming Brazil’s

energy efficiency market. The fast tracked

loan approval processes of the mechanism

can be made directly to end users or energy

efficiency service companies, and allows for

flexibility in the structuring of projects, with

guarantees of up to 80% of the project cost.

The lack of access to specific project financ-

ing is one of the main barriers for the de-

velopment of both energy efficiency projects

and a sustainable market of energy service

companies in Brazil. Obstacles to financing

include that fact that these

service companies don’t have

significant assets against

which to borrow, and that

their assets are mainly energy

savings contracts with pay-

ment streams that vary de-pending upon performance.

Other important barriers for the develop-

ment of the energy efficiency market in

Brazil include the lack of:

• Specific financing mechanisms forcompanies and their clients

• Trust in the expected financial benefits

of proposed projects

• Efficiency-related expertise within

organizations, causing difficulty in

“selling” these projects either internally

or to different market players; and,

• Capacity among market players to

develop a strong energy efficiency

market.

The project therefore contemplates a ca-pacity-building program together with the

financing mechanism in an amount of US$25

million, administered by the UNDP.

The IDB is expected to act as Guarantor of

Record for up to US$25 million

under the EEGM, taking up to

US$15 million of exposure for

its own account, while Global

Environment Facility (GEF)

funds will support the other

US$10 million of risk.

www.eegm.org

Commercial buildings turn the switch on energy efficiency

$

Winner of the 2014

“QUALIESCO”

Award for innovation for energy efficiency project,

with guaranteed savings

in energy achieved.

More info?

read the case studyshare the blog postdownload thepublication

Contact information:Patrick Doyle | [email protected] McClymont

http://www.eegm.org/http://www.abesco.com.br/qualiesco/http://www.iadb.org/en/structured-and-corporate-finance/climate-solutions,8136.htmlhttp://blogs.iadb.org/sectorprivado/http://www.eegm.org/sites/default/files/scf_eegm_en_print.pdfhttp://www.eegm.org/sites/default/files/scf_eegm_en_print.pdfhttp://www.eegm.org/sites/default/files/scf_eegm_en_print.pdfhttp://www.eegm.org/sites/default/files/scf_eegm_en_print.pdfhttp://blogs.iadb.org/sectorprivado/http://www.iadb.org/en/structured-and-corporate-finance/climate-solutions,8136.htmlhttp://www.abesco.com.br/qualiesco/http://www.eegm.org/http://www.iadb.org/en/structured-and-corporate-finance/climate-solutions,8136.html


22/5214Innovations LIVE | IDBNatural capital- financing the sustainability of this development asset

Natural capital- financing the

sustainability of this development assetLatin America gets an extra boost towards a paradigm shift in the conservation andsustainable use of ecosystems and biodiversity.

Latin American countries are betting on a new development model ofwhich emphasizes the conservation of their forests.

Our planet is currently facing major chal-

lenges due to climate change. The popula-

tion of Latin America and the Caribbean

is particularly vulnerable, as it is the most

urbanized region in the world. By 2050 it

is expected that 87% of the population of

the region will live in cities, and yet, a large

percentage will continue to depend on eco-

nomic activities that are very sensitive to

climate change, such as agriculture.

It is currently estimated that a rise in tem-

perature of 2.5 degrees Celsius by 2050

could cost the region’s economies between

2 and 4% of their annual GDP.

It is in this context that the IDB sup-

ports countries in Latin America and the

Caribbean to reduce their greenhouse gas

emissions and to adapt to the impacts of

climate change. The IDB addresses climate

change through projects in sectors such as

energy, housing, urban transport, agricul-

ture, water management, and sustainable

forest and land use.

Currently, 47% of CO2 emissions in the

region are a result of deforestation, com-

pared to the 18% worldwide average. Latin

America and the Caribbean have lost four

million hectares of forest per year between

2005 and 2010, due to either indiscriminate

logging or arable land extension in order to

fulfill local and global demand. This is the

highest deforestation rate in the world.

High rates of tropical deforestation have

severe consequences for global and local cli-

mate change, loss of biodiversity, flooding,

siltation and soil degradation. Deforestation

also represents a threat to the livelihoods

and cultural integrity of forest-dependent

communities and the supply of forest prod-

ucts, as well as ecosystem services that sus-

tain a growing population.

Unfortunately, following the traditional

growth model, countries tend to lose their

forests. The IDB helps countries in Latin

America ensure economic development,

food production and security, while protect-

ing their rich forest resources and building a

sustainable future.

In the particular case of the Amazon Basin,

countries are coming together and betting

on this new model of development with sup-

port from the IDB. For example, Guyana is

implementing its Low Carbon Development

Strategy through which policies are estab-

lished to guide economic growth reducing

pressure on its forests. Brazil launched a

global partnership between governments, fi-

nancial and business leaders, conservation-

ists, and public and private donors to fund

ARPA for life. This program will support the


23/5215 Innovations LIVE | IDB

US$167million

Disbursed/leveraged for climate change projectson forests and land use in the last five years alone

Countries involved:

Brazil, Colombia,Guyana, Guatemala,Mexico, PeruDates of implementation:

2012-2023Institutional counterparts:Global Environment Facility (GEF)FIPFCPF

IDB Group:Multilateral Investment Fund (MIF)IDB Divisions:Rural Development and Disaster RiskManagement (RND)Climate Change and Sustainability (CCS)Structured and Corporate Finance (SCF)

protection of 60% of the Brazilian Amazon

forest over the next 25 years. That’s 518,000

square kilometers (roughly the size of Spain)

of tropical rain forest preserved. Colombia

and Peru also aim to have zero net defor-

estation in the Amazon region by 2020 and

2021 respectively, using a holistic approach

at the landscape level integrating policy re-

forms and climate finance.

In addition to mobilizing public, private

and international climate financing and de-

veloping innovative solutions for financing

through capital markets, the IDB also sup-

ports new forms of private funding to lever-

age additional resources and to promote

new business opportunities.

In 2013 alone, Latin America and the

Caribbean received 2,806 million in inter-

national climate finance. Of this total, 1,220

million were channeled through the IDB, ac-

counting for a 43% of the total.

However, we know that funding is not

enough. That is why we work closely with

countries to build local capacity throughknowledge, and provide innovative solu-

tions focusing in policy and the creation

of new technologies, all this to enhance

the quality of life of over 600 million

Latin Americans.

Natural capital- financing the sustainability of this development asset

$

More info?

Peru forests celebrateSix reasons tocelebrate on WorldEnvironment Day

>Peru’s forests gets US$300 millionWorking with the IDB to revert deforestation, today Peru has the support of international

donors such as Norway and Germany to reduce deforestation and tackle the underlying

social problems through a comprehensive approach that includes the recognition of

indigenous lands and stronger participatory process, policy reforms, equitable benefit

sharing mechanism and a solid forest monitoring system, among others.

The IDB is proud to accompany Peru in its quest for sustainable, low-carbon development,and offers continuous technical support to ensure a resilient future.

Contact information:Juan Chang | [email protected] Lima | elima@iadb

http://blogs.iadb.org/cambioclimatico/2014/09/25/this-week-the-peruvian-forests-have-a-reason-to-celebrate/http://blogs.iadb.org/cambioclimatico/2014/06/03/six-reasons-to-smile-on-world-environment-day/http://blogs.iadb.org/cambioclimatico/2014/06/03/six-reasons-to-smile-on-world-environment-day/http://blogs.iadb.org/cambioclimatico/2014/06/03/six-reasons-to-smile-on-world-environment-day/http://blogs.iadb.org/cambioclimatico/2014/06/03/six-reasons-to-smile-on-world-environment-day/http://blogs.iadb.org/cambioclimatico/2014/06/03/six-reasons-to-smile-on-world-environment-day/http://blogs.iadb.org/cambioclimatico/2014/06/03/six-reasons-to-smile-on-world-environment-day/http://blogs.iadb.org/cambioclimatico/2014/09/25/this-week-the-peruvian-forests-have-a-reason-to-celebrate/


24/52Innovations LIVE | IDB 16Green Bonds: the rise of a new asset class in Latin America

Green Bonds: the rise of a new

asset class in Latin AmericaCapital markets provide a solution to the finance gap for small clean energy andenergy efficiency projects.

IDB Project #

ME-L1150


Mexico Approval date:

2014Institutional counterpart:Clean Technology Fund


US$ 50 millionSenior revolving loan (max)US$ 75 millionPartial Credit Guarantees (PCGs)

The PCGs will be provided by the IDB (approx.US$ 56 Million), and the CTF (US$ 19 Million).

Additionally, the International Finance Corpora-tion (IFC) is envisioned for possible co-financingand co-guarantee of the first and second phases,respectively.

IDB Divisions:Financial Markets (FMK)

As the first green securitized bond in the region that is fully compliantwith the Green Bond Principles, this project facilitates access to thisnovel type of security for local and international institutional investors.

One of the major obstacles encountered by

clean energy and energy efficiency projects

is the lack of long-term financing, particular-

ly for small sized projects (≤

5 MW), sinceinvestors and lenders focus primarily on

large projects. The funding sources accessed

by the few existing small sized clean energy

projects are usually expensive, limited, re-

quire high collateral, and have very short

terms maturities.

The project seeks to securitize a pool of

clean energy and energy efficiency projects

originated by Energy Service Companies

in order to obtain financing in the capital

markets with better financial conditionsand maturities that respond to the specific

needs of these projects. The project will also

support technical innovation of these com-

panies, while tackling key sectors that can

contribute to the reduction of greenhouse

gas emissions.

This project will help energy service compa-

nies access capital markets through the is-

suance of Green Bonds. This project is thus

contributing to the development of Mexico’s

capital market, creating an important prece-dent for this new asset class.

All Energy Service Companies wishing to

access Green Bond must:

• Use proceeds for eligible green project

categories;• Have a process for project evaluation

and selection;

• Separate management of proceeds to be

tracked by the issuer; and

• Comply with periodic reporting

requirements.

The IDB offers the Energy Service Companies

a financing package of up to US$106 million

in two stages, with another US$19 million

mobilized from the CTF.

The structure includes financing in the form

of a revolving credit line (up to US$50 mil-

lion, with a term of up to 8 years) to finance

clean energy and energy efficiency projects.

It also includes guarantees from the IDB and

the CTF to back the issuance of the green se-

curitized bonds.

The resources obtained from each issuance

of green bonds will be used to replenish the

revolving loan to warehouse new projects

and subsequently securitize them. This turn-over is expected to make it possible to make

at least three placements of green bonds

every 18-24 months.

This structure could be replicated in capital

markets throughout Latin America and the

Caribbean, or with other underlying assets.

$

More info?

read theGreen Bond Principlesreport by CERES

Contact information:Maria Tapia | [email protected] Parodi | [email protected] Sacristan | [email protected]

http://www.ceres.org/resources/reports/green-bond-principles-2014-voluntary-process-guidelines-forissuing-green-bonds/viewhttp://www.ceres.org/resources/reports/green-bond-principles-2014-voluntary-process-guidelines-forissuing-green-bonds/viewhttp://www.ceres.org/resources/reports/green-bond-principles-2014-voluntary-process-guidelines-forissuing-green-bonds/viewhttp://www.ceres.org/resources/reports/green-bond-principles-2014-voluntary-process-guidelines-forissuing-green-bonds/viewhttp://www.ceres.org/resources/reports/green-bond-principles-2014-voluntary-process-guidelines-forissuing-green-bonds/viewhttp://www.ceres.org/resources/reports/green-bond-principles-2014-voluntary-process-guidelines-forissuing-green-bonds/view



How can financing provide a

solution to natural disasters? Increasing the availability, stability, and efficiency of contingent financing helpsmitigate the impact of severe natural disaster on Nicaragua’s public finances.

IDB Project #

NI-X1007NI-T1188


NicaraguaDates of implementation:

2014-2015Institutional counterpart:Ministry of Finance of Nicaragua and theExecutive Secretariat of the National Systemfor Prevention, Mitigation and DisasterManagement.


US$186 millionContingent financing and US$220.000 in non-reimbursable resources provided by the DisasterPrevention Fund of the Bank

The coverage of the contingent loan is availablefor a period of 5 years (renewable for another5 years), while the technical assistance isexpected to be fully implemented by 2015.

IDB Divisions:Capital Markets and Financial Institutions (CMF)Rural Development and Disaster RiskManagement (RND)

Establishing state of the art financial risk management practices isan essential part of an integrated climate change and disaster riskmanagement strategy.

Given Nicaragua’s high level of financial vul-

nerability to disasters and climate change,

the country’s government is structuring an

ex ante financial coverage through a contin-gent loan of US$186 million.

Led by the Ministry of Finance, in coordina-

tion with the Executive Secretariat of the

National System for Prevention, Mitigation

and Disaster Management (SINAPRED), ef-

forts to develop a financial r isk management

strategy are still at an early stage.

The design of this instrument has incorpo-

rated “parametric triggers” to calculate the

disasters severity and determine amounts ofthe loan disbursements, based on a combi-

nation of raw magnitude of the event (pre-

cipitation, wind speed, etc) and the total

affected population that seeks to establish a

correlation among the intensity of an event

and the amount of losses it generates. The

main advantage of these parametric triggers

is that the quick estimation of losses caused

by a disaster allows for an (almost) immedi-

ate availability of resources after the occur-

rence of an eligible event.

Prestigious scientific organizations, the ac-

ademia and the reinsurance industry are

working to develop and implement these

“parametric triggers” under IDB’s strategicpublic-private partnerships:

• The National Oceanic and Atmospheric

Administration (NOAA) to model

hurricanes and tropical storms

• The United States Geological Survey

(USGS) to model earthquakes, and

• The National Aeronautics and Space

Administration (NASA) to model

precipitation and rainfall.

This collaborative work with scientific,

academic and professional communitieshelps to bring the state-of-art innovation for

designing and increasing the reliability of

the triggers.

The Inter-American Development Bank has

also approved US$1 billion in contingent

credit loans for natural disaster emergen-

cies such as hurricanes, earthquakes and

floods for the following countries: Dominican

Republic, Honduras, Ecuador, Panama, Costa

Rica, and Peru.

www.iadb.org

How can financing provide a solution to natural disasters?

$

More info?

press releaseFinancial RiskManagementApproach

Contact information:Juan Jose Durante | [email protected] Hori | [email protected]

http://www.iadb.org/en/topics/natural-disasters/idb-helps-latin-america-prepare-for-the-financial-impact-of-natural-disasters,2715.htmlhttp://www.iadb.org/en/news/news-releases/2013-11-27/nicaragua-improves-respond-to-natural-disasters,10676.htmlhttp://www.iadb.org/document.cfm?id=1319677http://www.iadb.org/document.cfm?id=1319677http://www.iadb.org/document.cfm?id=1319677http://www.iadb.org/document.cfm?id=1319677http://www.iadb.org/document.cfm?id=1319677http://www.iadb.org/document.cfm?id=1319677http://www.iadb.org/en/news/news-releases/2013-11-27/nicaragua-improves-respond-to-natural-disasters,10676.htmlhttp://www.iadb.org/en/topics/natural-disasters/idb-helps-latin-america-prepare-for-the-financial-impact-of-natural-disasters,2715.html


26/52Innovations LIVE | IDB 18Making green finance available to those most vulnerable

Making green finance available

to allHarnessing the networks and capital of microfinance institutions to bring green finance to those most vulnerable.

IDB Project #

RG-M1205

Countries of implementation:

Mexico, El Salvador,Nicaragua, DominicanRepublic, Colombia,Peru, Bolivia, Paraguayand Jamaica Approval date:

2012Institutional counterpart:Nordic Development Fund


US$7 millionUS$400,000 per project

IDB Group:Multilateral Investment Fund (MIF)

Low-income communities in Latin America and the Caribbean do nothave broad access to clean energy and energy efficient technologies; theyare also disproportionately affected by the effects of climate change.

Small farmers in areas experiencing more

frequent droughts, business owners look-

ing to increase their competitiveness with

energy-efficient products, and low-incomehouseholds that seek access to small-scale

energy sources all need

solutions— and these solu-

tions cost money. However,

the microfinance institu-

tions that supply the bank-

ing services on which most

of these entrepreneurs

depend have little to no

experience financing these

types of investments.

EcoMicro seeks to bridge this gap with a

program designed for Latin American and

Caribbean microfinance institutions (MFIs).

EcoMicro’s purpose is to help MFIs devel-

op green finance products so that micro,

small, and medium enterprises and low-in-

come households can access clean energy,

increase their energy efficiency, or adapt to

climate change. This innovative program

also provides benefits for MFIs themselves,

as it helps them green operations and pro-

vides them the capacity to analyze their loanportfolios’ vulnerability to climate change.

EcoMicro will provide a total of $7 million in

grants to 12 MFIs across the region. Funds

are used to develop, market, and launch

green finance products in each MFI, and they

leverage the MFIs’ balance sheets – unlock-

ing private funds that would not otherwise

be available for climate activities. Demand

for EcoMicro has been high: 100 institu-

tions in the region have competed for the 12

grants, demonstrating that the industry seesgreen finance as a growth area. Interest in

adaptation lending has grown

in each successive selection

round from 31% to 66% of ap-

plicants seeking to develop ad-

aptation products.

Six EcoMicro projects, co-fi-

nanced by the IDB’s Multilateral

Investment Fund (MIF) and the

Nordic Development Fund (NDF), are already

underway. With the support of EcoMicro, TeCreemos from Mexico and Caja Arequipa

from Peru are commercializing green fi-

nance products for clean and efficient

energy solutions such as solar water heaters

and efficient refrigerators that can reduce

operational costs through energy savings

for microentrepreneurs and low-income

households. FDL in Nicaragua, Diaconia in

Bolivia, and Sur Futuro in the Domincan

Republic are developing loan and microin-

surance products to support small farmers

in adapting their crops, irrigation systems,and product mixes to climatic effects, and

hedging against future losses.

Six other projects are being developed in El

Salvador, Colombia, Paraguay, Bolivia, and

Jamaica.www.ecomicro.org

$

More info?

learn what is financedby ecomicro and how

Winner

UNFCCC Lighthouse

Activity AwardsMomentum for Change

Contact information:Gregory Watson | [email protected]

http://www.ecomicro.org/http://www.ecomicro.org/http://www.ecomicro.org/http://www.ecomicro.org/


27/52

> US$102.5 trillionThis is the figure we need to invest by 2030 to ensure sustainable economic growth

Climate finance was at the core of the discussion among leaders whogathered for the UN Climate Summit in New York, and the New ClimateEconomy report, presented by the Global Commission, has set the numberswe have to confront with when it comes to talking about financing.

According to this report “maintaining

or strengthening economic growth until

2030 will require a significant increasein investment, including an estimated cu-

mulative US$89 trillion of investment in

infrastructure”. In order to make this eco-

nomic growth sustainable, increased in-

vestments are needed in energy efficiency

and low carbon technologies for an esti-

mated total of additional US$ 13.5 trillion,

the report highlights.

The question is: did the Summit provide

an answer to this huge financial challenge?

Governments, Investors and Financial

Institutions announced the mobilization

of about US$200 billion by the end of

2015 to support climate action. In addi-

tion to the initial pledges of about US$2.3

Billion from contributing countries for the

capitalization of the Green Climate Fund,

there has been a very positive response

from the financial and private sector side.

• A coalition of institutional investors,

named AP4, committed US$100 billionof institutional investments to reduce

the carbon footprint and to measure

and disclose the carbon footprint of at

least US$500 billion in assets under

management. In addition, three major

pension funds from North America and

Europe announced $31 billion accelera-tion in low-carbon investments by 2020.

• Commercial banks also committed to

US$30 billion in new climate finance by

the end of 2015 by issuing green bonds

and other innovative financing initiatives.

• The insurance industry has committed

to double its green investments to US$82

billion by the end of 2015 and announced

it would increase the amount placed in cli-

mate smart investments to ten times thecurrent amount, by 2020.

IDB President Luis Alberto Moreno, who

participated as a speaker in the Summit,

confirmed the strong commitment of the

IDB and reaffirmed the target of achiev-

ing a 25% lending target for climate and

sustainability related operations to be

achieved by 2015.

There is still a way to go to cover the

trillion figures, but it looks like that theSummit helped us to get on the right track

to achieve sustainable economic growth.

Gloria ViscontiMore at: blogs.iadb.org/climatechange

More info?

read all BIDcambioclima

blog posts:blogs.iadb.org/climatechange

Also check out:

Could you reduce yourenvironmental impactfor a whole week?

Changing behavior is one of the most chal-lenging things about working in Corporate

Environmental and Social Responsibility(CSR). There are many simple actions thatemployees can adopt on a daily basis thatcan reduce the environmental footprint oftheir organization. The question is howcan a CSR program motivate employeesto adopt more sustainable practices, anddo so in a way that is fun, yet educational?

That is exactly what the No Impact experi-ment is all about. The week-long challengeaims to raise environmental awarenessabout the impact from our daily activitiesin a way that fosters long-term behavioralchange.

The purpose of carrying out the No Impactchallenge in the workplace is to try and

foster lifestyle changes that will reduce theenvironmental footprint of the organiza-tion and improve the health and well-be-ing of the employees. Rather than beingviewed as a “challenge”, the No ImpactWeek should be viewed as an opportuni-ty; an opportunity to learn about yourself,your community and your environment.

The IDB carried out the No Impact Week inWashington D.C. from September 28th-Oc-tober 5th and in Buenos Aires, Argentinafrom November 9th to the 16th.

Maybe it’s time for you to promote a NoImpact Week in your organization?


http://blogs.iadb.org/climatechangehttp://blogs.iadb.org/climatechange


28/52Innovations LIVE | IDB 20Five steps to turn on the heat and avoid CO2 emissions

P h o t o : ©

P h o t o : © F a b i o S a r t o r i - E n e l G r e e

n P o w e r

Five steps to turn on the heat and

avoid CO2 emissionsComprehensive scheme addresses the lack of risk capital to cover resource risk ofgeothermal projects, and reduces fossil fuel dependency.

IDB Project #

ME-L1148ME-G1005


MexicoApproval date:

2014Institutional counterpart:Nacional Financiera (NAFIN)


US$ 120 million54.3 IDB, 54.3 CTF and 11.5 local counterpart

IDB Divisions:Capital Markets and Financial Institutions (CMF)Climate Change and Sustainability (CCS)

Latin America and Caribbean have great and still vastly under-exploitedgeothermal potential, estimated up to 70GW. This could replace morethan 21% of the current installed capacity in the region.

Over a dozen countries in the region are

actively pursuing the development of new

geothermal power plants in order to further

reduce their dependency on fossil fuels andto shield their economies from fuel price

volatility.

In Mexico, these five innovative financial

mechanisms overcome the barriers imposed

by high resource risk during test and pro-

duction drilling of geothermal projects:

• Access to credit from earlier stages of

development of projects, thus reducing

high-risk capital needs for developers

• Back credit by a guarantee or insurance

policy to reduce losses when no orinsufficient geothermal resource is found

• Continued financial support for projects,

making it possible to refinance as

projects evolve, matching financing

terms to lower-risk profiles at later

stages of project development

• Optimized leverage of available high-

risk capital within a portfolio of projects

• Align incentives among parties for

developing successful projects

The program is expected to support the de-velopment of 300MW of geothermal energy

capacity and the avoidance of 33 MTons CO2

in Mexico.

The new energy legislation, approved in

August 2014, includes a set of regulations

specific to geothermal. The IDB collaborated

actively in the production of this new legis-lation, mainly related to the establishment

of a concessional regime and specific con-

siderations on the use of the resource, by

which developers should be granted better

guarantees for their investments.

A combination of various sources of conces-

sional long term loans and grant funding,

including contributions from international

donors (Clean Technology Fund, CTF) and

a local contribution from the Mexican gov-

ernment, has made possible a structurethat will allow risk sharing mechanisms to

unlock credit for these projects.

IDB with its partners designed the instru-

ment to optimize the use of available fund-

ing, investing grant resources only where

they are most efficient and where they

leverage the most financing. As minimum

capital requirements per project are a pre-

condition for eligibility for financing under

the program, the instrument will necessar-

ily leverage a significant amount of privateresources.

www.iadb.org

$

More info?

press releaseMoUread the blog post

Contact information:Ramon Guzmán | [email protected] Alatorre | [email protected]

http://www.iadb.org/en/news/news-releases/2014-06-02/mexico-to-develop-geothermal-energy-with-idb-support,10830.htmlhttp://www.iadb.org/es/noticias/anuncios/2014-03-12/mexico-aprovechara-potencial-energia-geotermica,10765.htmlhttp://blogs.iadb.org/cambioclimatico/2014/04/24/mexico-vs-islandia-quien-ganara-el-mundial-de-la-geotermia/http://blogs.iadb.org/cambioclimatico/2014/04/24/mexico-vs-islandia-quien-ganara-el-mundial-de-la-geotermia/http://www.iadb.org/es/noticias/anuncios/2014-03-12/mexico-aprovechara-potencial-energia-geotermica,10765.htmlhttp://www.iadb.org/en/news/news-releases/2014-06-02/mexico-to-develop-geothermal-energy-with-idb-support,10830.html



Shedding renewable light on the

mining sectorReducing the dependency of the mining companies on thermal-based energy whileimproving competitiveness and sustainability through solar energy.

IDB Project #

CH-L1069


ChileDates of implementation:

2014-2032Institutional counterpart:Canadian Climate Fund:Elee Muslin, Fund Advisor, [email protected]


US$81.5 millionIDB: $41,400,000.00Ordinary Capital: $20,700,000.00Canadian Climate Fund: $ 20,700,000.00Local counterpart: $41,300,000.00Total Cost: $82,700,000.00

IDB Divisions:Structured and Corporate Finance (SCF)Climate Change and Sustainability (CCS)

The Chilean mining industry currently accounts for 18 percent of energyconsumption and 19 percent of the country’s GDP.

Replacing conventional energy with solar

energy in a mining application, in a country

whose solar resources are among the best

in the world, will decrease the level of GHG

emissions in Chile’s northern transmission

grid while promoting sustainable economic

growth.

Currently, roughly 75 percent of Chile’s

energy sources are imported, representing

more than 50 percent of the total value of

the country’s imports. However, the Chile

committed to deriving 20

percent of total installed ca-

pacity from renewable sourc-

es by 2020.

Soaring power costs and un-

certainty over supply have

pushed Chileans to look

toward securing their own

energy supply, largely through

the construction of diesel or

coal-based generation.

The project will benefit from a concession-

al loan from the Canadian Climate Fund for

the Private Sector in the Americas (C2F)

to reduce the overall cost of debt for the

Borrowers, help the project overcome an in-

vestment barrier related to the cost of solar

versus conventional energy technologies

and improve the returns to the sponsor to

a level that is more consistent with sustain-

able private investments.

The project primarily consists of the con-

struction, operation and maintenance of

a 25.5 megawatt (MW) solar photo-voltaic

(PV) power project and its associated facili-

ties located in the Tarapacá region of Chile,

as well as the operation and maintenance of

a 1MW solar PV plant, for a total of 26.5MW.

The project will be connected to the nation-

al grid but will sell the bulk

of its power under a 20 year

power purchase agreement to

Compañía Minera Doña Inés

de Collahuasi, one of the larg-

est copper mines in Chile.

With many other solar projects

currently being contemplat-

ed by a conservative mining

industry, the success of the

project will serve as an in-

centive to greater investment to bring more

solar energy to Chile, a country whose solar

resources are among the best in the world.

The Atacama Desert presents exception-

al conditions for the development of solar

projects. It could boost the entire country’s

competitiveness and sustainability.

www.iadb.org

Shedding renewable light on the mining sector

$

The first

commercial scalesolar photo-voltaic

project in Chile to negotiate a long term

power purchase agreement

of any kind.

More info?

watch the videoread the DEO storydownload the APP

Contact information:Elizabeth Robberechts | [email protected] Tagwerker | [email protected]

http://www.iadb.org/en/structured-and-corporate-finance/c2f/canadian-climate-fund-c2f-homepage,7657.htmlhttps://www.youtube.com/watch?v=C2QrXXFyxqUhttp://deo.iadb.org/2013/en/stories/here-is-where-the-sun-shines/http://idbapp.net/?page_id=46http://idbapp.net/?page_id=46http://deo.iadb.org/2013/en/stories/here-is-where-the-sun-shines/https://www.youtube.com/watch?v=C2QrXXFyxqUhttps://www.youtube.com/watch?v=C2QrXXFyxqUhttp://www.iadb.org/en/structured-and-corporate-finance/c2f/canadian-climate-fund-c2f-homepage,7657.html


30/52Innovations LIVE | IDB 22Tailor-made financing helps the private sector to go green

For a peanut processor in Nicaragua, the

answer to lower energy costs is right there in

plain sight—in peanut shells. For a Costa Rican

fruit company, it may lie in the pineapple plants

that currently get plowed into the ground. A

large recycling operation in Honduras, mean-

while, is looking to lower its energy bills with

help from the sun.

Costly, unpredictable energy prices are

prompting a range of companies in Central

America to look at greener alternatives. The

Inter-American Development Bank (IDB) is

providing extensive technical assistance and

financing to show the viability of such invest-

ments, one boiler or biodigester or solar panel

array at a time.

A US$50 million Energy Efficiency Finance

Facility—established by the IDB, with support

from the Nordic Development Fund (NDF)—isoffering loans so companies can reduce their

energy use or generate some or all of their own

energy from renewable sources. A technical

assistance fund established under the program

provides grants for energy efficiency audits,

engineering studies, and cost-benefit analyses

to determine what might be the most attrac-

tive green solutions for a particular company.

While the initiative is geared toward the pri-

vate sector, ultimately it will help countries

throughout Latin America and the Caribbeanby helping cut overall carbon emissions and

by lowering consumption, thus reducing pres-

sure on the power grid. That complements

efforts the public sector is taking to meet the

challenges posed by climate change.

The IDB facility can finance up to half the cost

of a company’s energy efficiency investment or

renewable energy conversion with loans rang-

ing from $500,000 to $5 million. While that is

a small amount compared to most IDB loans,

it can mean a sizable investment for a small

or medium-sized firm. But many such projects

save enough money to pay for themselves injust a few years, making them attractive in-

vestments for companies looking to cut costs

over the long term.

So far, the IDB team has conducted more than

30 energy efficiency audits and feasibility

studies across a range of sectors, from shrimp

farming to clothing manufacturing to dairy op-

erations. This effort began in Central America,

but the Energy Efficiency Finance Facility is

open to companies in the rest of the region as

well.

In many cases, the studies have demonstrated

the viability of renewable energy—especially

solar or biofuel—to cut costs and bring envi-

ronmental benefits. Of course, each project

must be evaluated on its own merits, based on

a wide range of variables such as a company’s

size, energy usage, current costs, borrowing

capacity, operating priorities, physical plant,

and environmental and global climate benefits.

The country’s energy mix has a lot to do withprice stability. Many countries use imported

oil for a significant amount of their electricity

needs, and spikes in oil prices can significant-

ly drive up costs. Many industrial plants also

Tailor-made financing helps the

private sector to go greenDemonstrating, company by company, the feasibility and appeal of renewableenergy, through a private sector initiative gaining steam in Central America.

“If you want to really

tackle climate change,

you have to do it at a

company-by-company

level. As individual firms

start to get their energy

costs under control, their

competitors will sit up

and take notice”

Patrick Doyle

IDB Project #

RG-X1136

Region of implementation:

Central America Approval date:

2011-presentInstitutional counterpart:Nordic Development Fund


over US$100 million$12.3M Nordic Development Fund, $50M IDB,$50M private sector capital or local bankcofinancing.

IDB Divisions:Structured and Corporate Finance (SCF)

www.iadb.org

Contact information:Patrick Doyle | [email protected]

http://www.iadb.org/en/structured-and-corporate-finance/climate-solutions,8136.htmlhttp://www.iadb.org/en/structured-and-corporate-finance/climate-solutions,8136.html


31/5223 Innovations LIVE | IDB Tailor-made financing helps the private sector to go green

$have oil-fueled boilers that generate industri-

al heat, which can be an expensive and dirty

source of energy.

One promising source of cleaner, renewableenergy, especially in the agribusiness sector,

is biomass—organic material that can be

burned or fermented or treated in other ways

to release stored carbon and produce energy.

Biofuels produced from biomass are a car-

bon-free alternative to fossil fuels. The costs of

generating electricity or heat this way can also

be far lower and more predictable, especially

when crop waste or agricultural byproducts

are available in sufficient quantities to make

the project sustainable.

You need a certain scale to be able to produce

your own electricity from biomass. Whether

or not such projects make financial sense de-

pends to a large extent on a company’s current

energy costs: The more expensive these are,

the more attractive the investment in renew-

able energy.

>A Lot to Digest Another company determined to reduce

its energy costs is a meat processor called

Matadero Central, S.A.—Macesa for short.

Located on the outskirts of Juigalpa, in the

heart of Nicaragua’s ranching country, it is

the largest local employer, with a workforce of

more than 520.

After the cattle it buys from local ranchers,

energy is the company’s second-biggest ex-

pense, costing around $320,000 per month,

said Silvia Sequeira, who runs the plant. Chill

rooms and freezers can never be turned off.

The company, which processes 10,500 head of

cattle every month, sells fresh and frozen cuts

of beef for export around the world, as well as

other edible and non-edi

Documents

Innovations LIVE Effective Solutions to the Climate Challenge in Latin America and the Caribbean